Millions of motorists who were mis-sold car loans are being urged to file complaints as soon as possible to secure compensation from a new £7.5bn industry-wide scheme. The Financial Conduct Authority (FCA) and consumer champion Martin Lewis have advised claimants to get to the front of the queue by complaining promptly.
The scheme, which officially launched on Monday, covers motor finance agreements taken out between 6 April 2007 and 1 November 2024. It is split into two parts: scheme 1 for agreements from 6 April 2007 to 31 March 2014, and scheme 2 for those from 1 April 2014 to 1 November 2024. Both are broadly similar and are collectively referred to as 'the scheme'.
Compensation is available only if important information about commission was not properly disclosed. The average payout has increased from an earlier estimate of £695 to £829 per agreement. For scheme 1, the average is £734; for scheme 2, it is £881. The amount depends on the type of case: discretionary commission arrangements (DCAs) average £810, contractual tie cases average £807, and unfairly high commission cases average £1,203. Interest will be paid at the average Bank of England base rate plus 1%, with a minimum of 3% per year.
The FCA has tightened eligibility, reducing the number of affected agreements from 14.2m to 12.1m. Agreements with minimal commission (under £150 or £120 depending on date) are excluded, and visible links between finance and manufacturer may prevent compensation in contractual tie cases. The regulator emphasised that compensation is designed to restore consumers to the position they would have been in if treated fairly, meaning about one in three cases will have capped payouts.
Consumers can complain for free, and payouts could begin immediately in some cases. The FCA's chief executive, Nikhil Rathi, has stated that the scheme is now operational, and experts urge claimants to act without delay.
